In my blog yesterday I looked at how an optimum evolution of physical and logical networking would impact SDN and NFV. I also pointed out that this kind of radical futuristic outcome would be difficult to bring about. That raises the logical question of just where NFV (in particular) really is today, and where it’s going. This year is critical for NFV; if it can prove itself then it can have a big play in operators’ attempt to restore profit-per-bit. How’s it going? We’ll look at missions and benefits to find out.
The clearest NFV mission in terms of trial activity and market interest is virtual CPE (vCPE). This is also the purest application of the NFV mission articulated in the first NFV white paper in the fall of 2012. Virtual CPE means converting CPE that currently has embedded high-level service features (firewall, NAT, DHCP, etc.) to a model where these features are hosted rather than embedded.
While the mission is clear here, the details are murky. For example, many CPE service-termination devices today have firmware that can be updated and features that can be enabled and disabled. Many CPE devices also have essential service features that can’t be virtualized; home broadband gateways have WiFi, for example. There have been dozens of cost/benefit and business case analyses published for vCPE, but I have to say that I don’t accept the numbers for any that I’ve seen. The fact is that we don’t have a good handle on just what the differential cost for a CPE device that can host features might be, relative to the cost of a custom appliance of the type we use today.
One factor that makes vCPE particularly difficult to assess is the variability in the hosting model. The majority of vCPE offerings and trials focus not on cloud-hosting the features we’ve extracted from appliances, but hosting them locally on a generalized device. Thus, we really don’t have virtualized CPE as much as feature-elastic CPE. Can we build a box that lets you load features remotely for less than we’d build one based on updatable firmware? Should we see premises hosting of VNFs as just a first-cost stepping-stone to cloud hosting? If so, how do we get to that future? If not, does what we’ve created really deserve to be called NFV in the first place? There’d be no resource pool created by vCPE then; noting to exploit for future services.
The next clearest mission for NFV is mobile infrastructure. What makes mobile infrastructure a potentially compelling opportunity is that this is where most of the capex is going and where most of the network changes being planned are concentrated. It’s far easier to redo the technology of something you’re replacing anyway than to replace something just to redo the technology. 5G evolution in particular offers a critical opportunity because it’s going to happen, it’s probably going to coincide with the critical revenue/cost-per-bit crossover in 2017, and it will drive enough network change to allow new technologies to gain a substantial footprint—if they can prove themselves out.
One question that mobile infrastructure raises is whether a new mobile model based on overlay networking (logical connectivity overlaid on arbitrary physical infrastructure) could be proved out here. A mobile user is in many senses a candidate for a logical-connectivity service. A user would have a fixed logical address and that address would be mapped for delivery to the cell or hotspot the user happened to be in. Might we transform not only Evolved Packet Core (EPC) with this, but also WiFi offload, home WiFi, and maybe even home broadband? Could the mobile model be extended to what we’d normally think of fixed or wireline devices?
Mobile sounds like the hot corner for NFV, but there are issues. If anything is proposed that would alter the way devices themselves see the service, the standards changes need would take so long that it would make geological timescales look positively hasty. Some of the most compelling mobile infrastructure opportunities might be stalled by this challenge. There’s also the problem that any new mobile network is going to have to support all the current phones, many of which (like my own) aren’t even 4G. No operator is going to kick double-digit-percent of their customers off just to transform.
The last of the NFV missions is virtual networking, where NFV is used to deploy instances of switches and routers to build a virtual topology that is built at the trunk level using tunnels (created by whatever is convenient, but likely evolving to SDN). This mission could offer enormous opportunity because if it were managed optimally it could displace all of the current L2/L3 devices in the carrier network, most of them with virtual instances created by loading software onto server pools.
This is the NFV mission that generates the radical changes, the huge increase in the number of data centers and servers, and the shift of focus of carrier capex from L2/L3 boxes to servers and software. The greatest potential change in costs and benefits occurs with this mission, and of course the greatest risk. You have to figure out how to migrate gracefully to this new virtual state, and that means both having an understanding of what the end-game would look like and having a graceful evolutionary pathway to get there.
The last of the NFV missions is the most hypothetical—NFV as the platform for IoT-related services. If IoT develops to its full potential, it’s less about connecting sensors via 5G and IPv6 than it is about creating a secure and comprehensive repository of sensor data to be made available to applications and control functions. This application-and-control mission is very cloud-like but with the kind of SLA needs and dynamism that service features deployment would have, and that justify (maybe even compel) NFV use.
The challenge here is obvious. Nobody thinks about IoT this way and the other model, which is just a bunch of expensive promiscuous sensors stuck on the Internet, has so many economic, regulatory, and legal pitfalls to address that it would end up being nothing more than wearable technology and connected cars.
To my mind, these four missions define the benefit boundaries of NFV, and thus the extent to which it could actually hope to deploy. Here we have four possible scenarios:
- NFV is an intellectual exercise. This scenario comes about if the only NFV success we can point to in 2017 is the premises-hosted model of vCPE. With no compelling need for a resource pool, this doesn’t develop any assets-in-place to exploit with future services, and so NFV contracts to a CPE software management strategy that impacts, probably, only carrier Ethernet services and customers.
- NFV lite. This scenario comes into play if we get either enough vCPE central hosting or a combination of vCPE and mobile infrastructure deployment to build a small resource pool—perhaps a data center in each metro area. NFV would not account for more than about 8% of carrier capex under this scenario.
- Respectable NFV comes along if we get virtual networking for private network services along with vCPE and mobile infrastructure. In this scenario we’d see NFV represent about 15% of carrier capex over time.
- Optimum NFV is achieved if we get a logical IoT mission for NFV, or if the other three missions all succeed in an optimal way. If we get this, we end up with NFV representing about 27% of carrier capex as a steady state, and if we got all four missions to succeed we’d hit 35% of carrier capex.
It’s pretty obvious that the likelihood of these outcomes is highest for the early ones on the list above, and lower for the later ones. The biggest issue is that of benefits where two things would contribute to greater NFV penetration. First, a solid service management vision that covered everything from top to bottom would accelerate the operations efficiency and agility benefits. Second, a vision of the future network to which operators could track evolution would reduce risks and build a commitment to something more than a few diddles and dabs.
Operators are still groping with the question of how to improve profit per bit. I think the trend globally is to take a holistic view of services and infrastructure, and that means that even a tentative commitment to NFV has to be linked to a broader vision of transformation. The thing that started to change in 2015 and is surely changing in 2016 is that operators are demanding more than just claims of cost reduction or revenue improvement. I think those demands can be met, but I also think that the demands will transform the NFV vendor landscape over this year.